BACK TO WORK FOR DEPOT

Its merger dreams dashed by a federal judge, Office Depot withstood a stock market hammering on Tuesday and pledged to replenish its top management, build new stores and again treat would-be ally Staples as Corporate Enemy No. 1.

The Delray Beach-based company, the nation's leading seller of office supplies, also disclosed that it had used a two-track policy during its 10-month courtship with Staples - simultaneously sharing some information but withholding sensitive data on sales and cost.

Showing how fast corporate friendship can die, Office Depot Chairman and CEO David Fuente said more head-to-head competition between his company and Massachusetts-based Staples was inevitable. His comments came a day after U.S. District Judge William Hogan ruled that a Staples-Office Depot merger would violate U.S. monopoly laws.

In an interview, Fuente also was philosophical about the beating his company's stock took Tuesday on the New York Stock Exchange, dropping $3.81 a share to close at $15.625.

"I think the conventional wisdom was that if this deal wouldn't go through, our stock would get clobbered, and conventional wisdom has a way of coming true for a very short period of time," said Fuente, who built the chain in a decade from a single outlet in Lauderdale Lakes to 576 mega-stores.

The merger talks, he said, cost Office Depot about a dozen key managers and about six months' momentum in opening new stores.

"We wanted to open 80 to 90 a year; now we'll be scrambling to get 40 stores opened by the end of the year," he said. Rejuvenating the company's openings and adding top managers will be Fuente's main priority in the next three months, he said. He noted that company revenues climbed above analysts' expectations in the first quarter, to $38.8 million from $33.5 million in the quarter of 1996.

Fuente expected Office Depot's final bill for the failed merger to be as much as $20 million. Staples, which offered in September to absorb Office Depot for $3.5 billion in stock, said its costs would be higher.

Other competitors said they took advantage of the federal government's 10-month challenge to the merger, with No. 3 office supplier Office Max planning to have 700 stores by the end of the year. Unlike Staples, the chain already has several stores in South Florida, including outlets in Coral Springs and west Boca Raton.

"We've already had a victory in this merger," said Mike Weisbarth, vice president of investor relations for Shaker Heights, Ohio-based Office Max. "We took advantage of the window of opportunity to accelerate store openings."

Fuente, addressing one concern of analysts, said he was confident many of his company's trade secrets did not make it into the hands of his suddenly arch-rival. After initial Federal Trade Commission resistance to the merger, the companies distanced themselves to a degree from each other, officials of both companies said. Some material was turned over to outside consultants but kept from each company unless a merger was completed.

"We started gearing up our real estate several months ago, just to be on the safe side," said Office Depot spokesman Gary Schweikhart.

Like Office Depot, Staples also said it had separate teams - one working on integrating with the other company, the other actively competing with it.

The divergent possibilities on every decision created some strain.

"There is a certain sense of relief that the issue is resolved, that we're not continuing to do two scenarios," said Staples spokeswoman Susan Simon.

"It was corporate schizophrenia," agreed Schweikert, her counterpart at Office Depot. "Even Dilbert would have been pleased."